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  • Step 3 – Calculate your aggregated turnover

    If you aren't controlled by an exempt entity, you must work out your aggregated turnover to identify which tax offset you can claim.

    The rules for calculating aggregated turnover are the same as those for the small business entity concessions.

    Aggregated turnover is the sum of the following:

    • your annual turnover for the income year
    • the annual turnover of any entity connected with you, for that part of the income year that the entity is connected with you
    • the annual turnover of any entity that is an affiliate of yours, for that part of the income year that the entity is affiliated with you.

    Both Australian entities and foreign entities can be connected or affiliated with you. This means your aggregated turnover must include the annual turnover of both Australian and foreign entities for the period they are connected or affiliated with you.

    When you calculate aggregated turnover for an income year, do not include:

    • the annual turnover of other entities for any period of time that the entities are either not connected with you or are not your affiliate
    • amounts resulting from any dealings between you and your connected entities or affiliates for that part of the income year that they are connected or affiliated with you
    • amounts resulting from any dealings between your connected entities or affiliates for that part of the income year that each entity is connected or affiliated with you.

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    Annual turnover

    Your annual turnover is the total ordinary income you derive in the income year in the ordinary course of carrying on a business. This includes income on a worldwide basis. If you are not carrying on a business at any time during the income year, your annual turnover is nil.

    If you are a partner in a research and development (R&D) partnership at some time during an income year, then your aggregated turnover includes your proportion of the R&D partnership's annual turnover for that year.

    Once you have calculated your annual turnover, you will need to calculate the annual turnover for each entity connected or affiliated with you.

    Connected entities

    To work out your aggregated turnover for the income year you also need to determine if there are any entities 'connected with you'.

    You are connected with another entity if any of the following apply:

    • you control the other entity
    • you are controlled by the other entity
    • you and the other entity are controlled by the same third entity.

    Both Australian and foreign entities can be connected entities.

    You control a company if you, your affiliates, or you together with your affiliates have either:

    • shares and other equity interests in the company that give you and/or your affiliates at least 40% of the voting power in the company
    • the right to receive at least 40% of any income or capital the company distributes.

    You control a partnership if you, your affiliates, or you together with your affiliates have the right to 40% or more of the partnership's net income or capital.

    Different rules apply for a discretionary trust.

    You may also be connected with another entity as a result of the indirect control test.

    Your affiliates

    You need to determine if there are any entities that are affiliates of yours in order to work out your aggregated turnover.

    An individual or company is your affiliate if, in relation to the affairs of their business, they act, or could reasonably be expected to act, in either of the following ways:

    • in accordance with your directions or wishes
    • in concert with you.

    Your affiliates can be Australian and foreign individuals and companies.

    An individual or company is not your affiliate merely because of the nature of the business relationship you or the individual or company share.

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    Last modified: 16 Jun 2021QC 24604